The United States is finally catching up on the mobile payments and transaction
trends that have been making inroads in other countries for years. While it’s still a
modest trend, you do see more consumers and merchants demanding better mobile
payment choices these days. Having the largest financial institutions in the US,
including online processors such as PayPal and Google, hop on the mobile
bandwagon along with strong advertising has helped spur acceptance of mobile
transactions by the population of early adopters.
So what else is on the horizon that will further transform the payments industry
over the next few years? The next trends, after we get past the EMV adoption in
2015, appear to be more e-wallet options and possibly the advent of multi-function
cards.
E-Wallet Opportunities
A 2012 study revealed that most American consumers are interested in (and
receptive to) electronic-wallet transactions but are hampered by the lack of
financial institutions currently offering them. There is strong demand for e-wallet
services offered consumers’ existing banking relationships but the institutions seem
to be slow on the uptake. Contactless payment transactions are growing but are still
in the minority because the benefits to consumers have not been spelled out and
promoted well yet. Once the marketing and advertising matures for e-wallet
benefits, there will be dramatic growth in acceptance by consumers.
Multi-function Cards
Visualize the deck of credit and debit cards (each representing individual accounts)
a customer has at their disposal when they begin a transaction. Now, how about if
some of those accounts could be accessed from a single card, including a personal
debit account, a business credit account and a vacation/special occasion savings
account. That’s the idea of the multi-function card that would link multiple accounts
into a single card. So the shopper may purchase groceries from the “family” debit
account, buy a business lunch on the “business” credit account and order airline
tickets using the “vacation” savings account – all using the same plastic or even a
contactless card.
These multi-function cards hold significant promise for slimming the number of
cards you carry but unfortunately, they suffer worldwide from weak financial
institution promotion and therefore, consumer adoption. In any event, smartphones
are emerging as the platform of innovation preference and that trend remains
strong as we continue to live the evolution of the payment industry for merchants,
retailers and consumers.